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  • Sticks And Stones Part III 3 comments
    Aug 4, 2014 11:51 PM

    Ceasefire the name in the game of Gaza Occupation while the skirmishes among bulls and bears in the marketplace remains as reluctantly played since May 2013 as Sector Rotations remain the name of the game.

    Sticks are getting longer and stones larger with daytraders and swing traders getting noisier in the never-ending battleground.

    Complacent investors feeling nauseated by the sudden drop last week but basically not worth writing home to dear mom:

    >> SnP500 Daily: dl.shared.com/933korqnjl.png?tmp=1407225...

    >> Dow Jones Daily: dl.shared.com/liwtrjx490.png?tmp=1407227...

    >> Compq Daily: dl.shared.com/ylyk86p7bg.png?tmp=1407228...

    >> Russell200 Daily: dl.shared.com/vlllikhzjb.png?tmp=1407229...

    Just another storm in the teakettle?

    SnP500 suddenly becomes bearish for daytraders as the potential Ending Diagonal rears it's head. ED remains questionable until it has proven itself by forming either an a-b-c down or a i-ii-iii-iv-v run down. A sudden rally would make the weekly chart 5th wave scenario the higher probability. The Zweig Breadth Thrust of Feb 2014 remains viable for swing traders and medium-term traders. If Spx decides to keep going down; there are two major supports for the Spx on the daily: The high of February and the 200ma.

    Dow Jones can become a massive Running Correction when viewed longer term from the May 2013 high. More than a year of marginal higher highs higher lows? I am not an expert on running corrections being able to trade less than a dozen of this type at much lower timeframes such as the 30min and 60min charts. I am just trying to understand these seemingly corrective marginal rallies and pullbacks DJ has been forming that satisfies Neely's specifications of what constitute running corrections.

    As illustrated in my latest Comments; last year was a Wide Range Bar thus it is very possible another WRB might happen for 2014 and perhaps another WRB for 2015. Dow Jones pattern can support another WRB this year if it rallies vertically in the next 5 months or so. Major problem is how to find the final bottom on the daily chart before a presumably vertical rally on the weekly and monthly charts should follow - for those who would like to make another entry chasing this rally off the February 2014 significant bottom that resulted in 6% major pullback. Historically small but when viewed in the context of the May/October rabid whipsaws range can be considered a big insult added to the painful 7.53% max loss of the previous consolidation range that seemed to have lasted forever - next only to the 9 months consolidation range of Feb/Oct 2011 albeit that one resulted in 21.53% bear market correction. At any rate TIME = MONEY too.

    - Couple that with the Potential Zweig Breadth Thrust of Feb 2014 with proven track record of 80% success rate; it is not unreasonable to expect 2014 is going to be another wide ranged bar.

    Compq was a trend traders' nightmare in March to April but now a dream team as it remains a highly viable daytrade to the upside.

    Russell2000 remains a nightmare for short-term trend traders and a viable long position for Swing Traders and/or Medium-term Traders as it produced a Double Top on the daily. Problem now is there is no high confidence analysis whether this latest run down is either an a-b-c corrective that may lead to a Triangle formation or a minor i-ii-iii-iv-v run down which can become either a C-wave of an A-B-C or an A or 1 of a bigger A-B-C or 1-2-3-4-5. Too many possibilities perhaps suitable for the more nimble traders.

    For the longer term traders:

    >> SnP500 Weekly Chart: www.dropbox.com/s/gk8d4f1bxkfyuww/snapsh...

    >> Spx Yearly Chart: shared.com/hy6h34tbfu

    >> Dow Jones Bearish View: www.dropbox.com/s/oaqcqxkr3m571d6/snapsh...

    2,143 remains the Nominal Target for the Complex Spiral Meltup Scenario specified in November 2012. This is the one I have been trading all along until the SBT of February appeared and Dow Jones started forming a potential Running Correction early this year which basically raised the possibility an Irrational Exuberance Rally might just actually happen on the weekly and monthly charts.

    Dow Jones remains bearish as far as long-term Bearish Fibonacci Contrarians are concerned. To each his/r own.


    Trading Strategies:

    With the Gaza Peace Talks starting to gain some traction and/or the Ukraine Obama vs. Putin Words War + Argentine Default starting to fade into the background; a sudden strong rally can never be far behind if and when traders and investors finally get going to satisfy their pent up desire to chase this two+ year old Bull Run.

    But then nobody will be able to predict what could happen next in this highly whipsawy markets until the deed is practically done on the short term basis. Much less to the medium-term basis.

    For us daytraders and swing traders who prefer to trade the trend; every run down have proven to be excellent buy the dips as the Bull Run becomes entrenched. But then, every run down remains a fair warning it might just become the start of the downtrend and this latest run down on intraday promises to be the most viable albeit not convincingly so:

    >> SnP500 Intraday: dl.shared.com/yx4i5pfqns.png?tmp=1407231...

    Downside limit is as specified and can be used as a stop loss.

    Thus, for intraday contrarians the next run down is a buy at or near it's 5th nominal taget. Note that Spx 3rd is already over-extended thus there is a possibility the 5th might truncate or the 4th and 5th might not print at all. DJ, Compq, and R2K intraday 3-rds are not over-extended.

    Sell some on a potential a-b-c Pullback Up then keep some just-in-case a higher high rally actually happens.

    For the Contrarian Bears; shorting an a-b-c pullback up may prove to be an excellent trade. Thus, for the more nimble traders; going short is not bad at all. Major resistance is as specified with the gap down for SPY the one bears have to protect otherwise ...

    For me:

    - The SSO swing trade buy of April 2013 got stopped out with at least 2/3 paper profits realized with 13+% gain. Not bad with more than 3 months hold. Not very satisfactory since usually my SSO Swing Trades produce 25 to 35% gains with some going more than 50%. Can't win them all. What's important is that I executed the SOP Trading Strategies as a part of DISCIPLINE far too many traders will never be able to master.

    - The bigger picture for SnP500 vis-a-vis Weekly Complex Spiral Meltup Scenario and/or Zweig Breadth Thrust and/or Dow Jones' Potential Running Correction are worth taking into consideration. Thus, PATIENCE needs to be exercised and I remained compelled to trade this rally to the upside until the trend is no longer a friend or until a definitive top presents itself. Finding tops can be considered low probability since top runs tend to be much more complex than bottom runs.

    - Will try to buy YM and/or NQ again with YM a potential Swing Trade and NQ a potential Daytrade.

    But then, I am a trader first and investor second. A vertical drop that follows a potential Ending Diagonal is a fair warning possible trend changer - at least for the short-term basis. Thus, more discipline needs to be exercised in order to minimize potential losses just-in-case we do undergo another correction of 10 to 20% sooner than expected.

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Comments (3)
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  • blindfreddy
    , contributor
    Comments (86) | Send Message
    Hi aarc..you use a lot of TLA's
    (three letter acronyms)
    you know, SPO, SOO, EWA
    It would be great if these were explained to the uninitiated, is there a summary of your investing philosophy anywhere ?
    9 Aug 2014, 11:37 PM Reply Like
  • aarc
    , contributor
    Comments (3756) | Send Message
    Author’s reply » Sorry about that.


    My daytrades and/or swing trades are definitely not designed for investors who need not follow my recommendations for the short-term basis


    Thus they need not understand the Instablogs except perhaps to get the gist of what the short-term environment is all about.


    << Last Instablogs with special emphasis for the medium-term to long term traders and investors were done in October/November 2011 and in July/November 2012. Since then, all my Instablogs are not worth much to guide investors in making long-term decisions and/or worth the risk of losing precious long-term positions based on short-term market gyrations.


    >> SnP500 Aggressive May 2012: http://bit.ly/1mDJs9I


    Please read the monthly chart Aggressive Scenario if you desire to keep holding majority of your investments through short-term thick and thin. Everything in between 1576 to 2485 can be considered noise for long-term investors. Unless something dramatically bearish actually started happening comparable to the Financial Crisis of the Century.


    Ignore most, if not all, short-term analyses and trading strategies if you worry over the medium-term basis but not the short-term. The weekly charts for SnP500 can provide guidance but not a guarantee the 2,143 nominal target for SnP500 will be achieved/exceeded.


    I specialize in SnP500 using Mastering Elliott Wave Analysis by Glenn Neely as a primary guide. Everything is secondary and/or supplementary.
    11 Aug 2014, 05:54 PM Reply Like
  • blindfreddy
    , contributor
    Comments (86) | Send Message
    thanks aarc for the explanation :)
    15 Aug 2014, 11:55 AM Reply Like
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